00074918.2014.980390

(1)

Full Terms & Conditions of access and use can be found at

http://www.tandfonline.com/action/journalInformation?journalCode=cbie20

Download by: [Universitas Maritim Raja Ali Haji] Date: 17 January 2016, At: 23:36

Bulletin of Indonesian Economic Studies

ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20

Dutch Commerce and Chinese Merchants in Java:

Colonial Relationships in Trade and Finance,

1800–1942

Siwage Dharma Negara

To cite this article: Siwage Dharma Negara (2014) Dutch Commerce and Chinese Merchants in Java: Colonial Relationships in Trade and Finance, 1800–1942, Bulletin of Indonesian Economic Studies, 50:3, 498-500, DOI: 10.1080/00074918.2014.980390

To link to this article: http://dx.doi.org/10.1080/00074918.2014.980390

Published online: 03 Dec 2014.

Submit your article to this journal

Article views: 83

View related articles

(2)

498 Book Reviews

governments accountable. For example, Indonesian voters were asked which institution is most important. The correct answer, according to the authors, is the president, and they ind the fact that only 52% gave the ‘right’ answer problem -atic and with profound implications for ‘Indonesia’s democr-atic consolidation and the strengthening of its democratic culture’ (p. 20). But we don’t know how respondents evaluated the question. The fact that 48% listed other institutions (for example, the legislature, the judiciary, local government, political parties) as ‘most important’ may not relect lower ‘negative cognitive skills’ but, rather, rea -sonably different views about which institutions are important. Someone compar -ing the current era with the Soeharto regime might understandably conclude that a robust legislature or judiciary is the most important. Nor is it surprising that someone in Sulawesi might view the local government as more important to their everyday life than the president in faroff Jakarta.

Quibbling aside, this is a rich, thoughtprovoking volume that Indonesianists and Southeast Asianists will want to read and digest.

Allen Hicken

University of Michigan

http://dx.doi.org/10.1080/00074918.2014.980389

Dutch Commerce and Chinese Merchants in Java: Colonial Relationships in Trade and Finance, 1800–1942.

By Alexander Claver. Leiden: Brill, 2014. Pp. xxiv + 442. Hardback: $190.00

This book, by Alexander Claver, looks at the commercial relationship between the Dutch and Chinese in Java during 1800–1942. Its central questions are how trading enterprises functioned in colonial Indonesia (then called the Netherlands Indies) and how they adjusted to crises and external shocks; its central argu -ment is that capital, information, and security are key to any successful trading business. Claver observes, for example, that Chinese traders—who often lacked capital, information, and security—often took risks and ventured into collusion with creditors to circumvent their lack of resources. He inds that collaboration among the Dutch, Chinese, and indigenous populations in Java was necessary to stimulate commercial opportunities, even though these relationships were deli -cate and dificult to establish and maintain amid conlicting interests and shifting allegiances (p. 49).

During the commodity boom in the early 1880s, there were many instances of intricate inancial arrangements between capital, commerce, and agricultural enterprise. Driven by competition and temptation for proit during the trade boom, banks often supplied capital under imprudent conditions. The sugar crisis in 1884 forced them to make their intricate inancial relations more accountable and transparent. This made the trading business better equipped to weather external shocks associated with the dynamics of world trade (pp. 86–87).

The book also reveals that revenue farming became an institutionalised form of the close but awkward relationship between the Dutch and Chinese in Java.

(3)

Book Reviews 499

An owner of a revenue farm had the right to collect speciic taxes, to buy or sell valuable produce, and to monopolise commodities in a delimited area for a dei -nite period (p. 145). In effect, revenue farms transferred economic power from the Javanese aristocracy (which was perceived to be a threat to the Dutch) to ‘reliable’ individuals. The Dutch preferred to have their revenue farms managed by the Chinese, because of the latter’s perceived ability to establish syndicates (kongsi)

with suficient capital and expertise to develop successful businesses (p. 145).The book suggests that the Dutch saw Chinese traders as having a combination of trading spirit, a sense of frugality, and the courage to invest.

The reasons for the increasing divide between the Chinese and the indigenous population are also of interest. Beyond religious and cultural differences, the divide was widened further because of the different economic roles of the two groups. The Chinese were predominantly traders, living mainly in three Javanese cities: Batavia (now Jakarta), Semarang, and Surabaya. On the other hand, the indigenous people, such as the Javanese, Sundanese, and Madurese, were mainly peasants, living in small villages. From these different economic positions came mutual (but uneven) dependency, which the Chinese traders often controlled to their beneit.

Chinese traders and money lenders involved in revenue farming therefore developed a very negative public image. They were perceived by both the indige -nous people and the Dutch to be greedy and exploitative, because they looked for small proits and quick returns through high interest rates and took advantage of the poor indigenous population (p. 148). This had become a concern for a colonial government worried about Chinese dominance and its detrimental effect on Java -nese peasants. As early as the 1850s, Chi-nese business activity was considered conspicuous, accused of endangering the welfare of the indigenous population, and subjected to sharper restrictions (pp. 149–50).

Around 1900, the colonial government introduced the Ethical Policy, which was meant to protect the ‘poor’ and ‘unenlightened’ Javanese peasant against the oppression of feudal Javanese overlords and ‘exploitative’ Chinese business -men. The implementation of this policy was assigned to numerous government bodies and supported by budgetary expansion. Unfortunately, the policy gener -ated more promise than performance. Educational inequality remained extremely high, as shown by a literacy rate of only 7.4% among the indigenous population in 1930 (p. 244). The political will to initiate ethical programs faded with the onset of the economic crisis of the early 1920s and 1930s.

The book also touches upon a period of rising nationalism in Indonesia. It shows the swing in the colonial government’s attitude towards political organisation. In the beginning the colonial government adopted a permissive approach to various forms of political organisation. The attitude changed after several outbursts of violence in West Java and West Sumatra. The colonial government started to turn against the growing signs of discontent and radicalism from 1919 onwards. The shift to conservatism and repression triggered a stronger nationalistic sentiment, culminated in a youth congress in Batavia on 28 October 1928. Yet the book does not discuss Chinese involvement (or lack of involvement) in the political dynam -ics at that time. In the context of their signiicant involvement in business, an assessment of ethnic Chinese involvement in politics (either the nationalist move -ment or local politics) could have enhanced the reader’s understanding of the

(4)

500 Book Reviews

political economy of ethnic Chinese business during the colonial era, and possibly beyond.

The book relects some similarities between the economy of the Netherlands Indies and that of contemporary Indonesia. It shows how the Netherlands Indies economy depended heavily on the export of primary products, such as sugar, coffee, rubber, tobacco, copra, and oil, and was therefore extremely vulnerable to price luctuations in those commodities. More than a century later, the Indonesian economy remains dependent on exports of primary commodities and on the busi -ness activities of ethnic Chinese entrepreneurs.

Claver’s book is a great source of historical information on longterm com -mercial relations between the Dutch and Chinese in Java, and should be a recom -mended reading for any economic historian with an interest in colonial Indonesia. Its strength is its rigorous use of new and neglected archival sources, while its chronological episodes and case studies support what is a coherent story. Yet the book would have beneited from discussions about the environmental impact of the extensive natural resource exploitation in Java during the commodity boom, in particular, and the role of the Chinese in the political arena, especially during key political transitions.

Siwage Dharma Negara

Indonesian Institute of Sciences (LIPI)

http://dx.doi.org/10.1080/00074918.2014.980390

Islamic Banking in Indonesia: New Perspectives on Monetary and Financial Issues. By Rifki Ismal. Chichester: John Wiley, 2013.

Pp. xxi + 544. Hardback: A$114.95; ebook: A$74.99.

As the world’s largest Muslim country, Indonesia is often seen and even assumed to have tremendous potential in Islamic banking. Yet little is known about Indo -nesia’s Islamic banking industry, particularly by international readers. Against this background, Rifki Ismal attempted to write a pioneering book on the subject. The result is a comprehensive volume consisting of 27 essays and covering a wide range of topics, including, in particular, liquidity risk management, depositors’ withdrawal behaviour, and Islamic monetary issues.

The book provides a thorough analysis of the concepts and practice of liquid -ity risk management in Indonesia. After reviewing conceptual literature related to liquidity risk management from conventional and Islamic perspectives, Ismal explains the general practices in Indonesia. He then constructs a liquidity man -agement index for the industry, using primary data from Indonesia’s three largest Islamic banks (which hold around 82% of the market share). He concludes that the relatively high index value suggests that the industry has been largely suc -cessful in managing liquidity risk.

From this macro perspective, Ismal investigates market liquidity behaviours. Using a questionnairebased survey, he identiies three segments of Islamic banking depositors in Indonesia: Shariadriven, proitdriven, and transaction driven depositors. He also identiies and criticises the liquidity management